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Economy and society during the crisis March 26, 2020

Posted by WorldbyStorm in Uncategorized.

I suppose this is the new crisis, as distinct from the one in the late 2000s, early 2010s. If so interesting to see this assessment by Cliff Taylor in the IT of the economic and financial resources available to this state in terms of underwriting the necessary disbursement by the government to ameliorate the situation, both medical and in terms of sustaining employment, supporting those in unemployment and rebuilding parts of the economy that will weather this badly.

He points to five areas – increased borrowing (particularly at a time where interest rates are exceedingly low), support from the EU (which has loosened various restrictions on borrowing etc this week), breaking into the cash reserves and/or using the monies put in escrow for the Apple tax case.

But his conclusion? Not exactly rosy, but nor is it gloomy. And this within the constraints of orthodox thinking on these matters. I find that latter interesting. Or perhaps a better way of putting it is that the orthodoxy has had to stretch to engage with the reality of a crisis so large that that orthodoxy is simply unfit for purpose in dealing with it, at least in the approaches applied during the status quo ante.

The bottom line is that we have significant cash both in the NTMA’s reserve and in other sources which can be used, if needed. For the moment the markets also remain open to borrow more.
A delicate balancing act lies ahead in paying the bills and higher debt levels and a move into deficit mean the outlook for the next government has changed significantly.

If needed? It will be needed.


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